XNA looks to reduce carrier rates almost 22% in 2018

Northwest Arkansas Regional Airport is planning to slash most rates for carriers in 2018 as a result of a nearly $550,000 decrease in interest on debt owed.

On (Friday) Dec. 8, members of the Northwest Arkansas Regional Airport Authority recommended approval of the rate changes for carriers, the airport’s 2018 budget and CEO Scott Van Laningham to receive a 7.5% pay raise. The board will determine whether to approve the recommended items Wednesday (Dec. 13).

Airport director Kelly Johnson said the savings in interest was a result of refinancing the airport’s debt.

“That had a big impact on the airline rates and charges going down, which means revenues are down but also our expenses are down.”

Based on enplanements, rates and charges to carriers would decline almost 22% to $5.91 per enplanement. In 2018, enplanements are expected to rise to 737,995, from a projected 716,000 in 2017. For the first 10 months of 2017, enplanements have risen 4% to 605,976, from the same period in 2016.

The airport’s rate consultant Ricondo & Associates proposed the carrier rate changes for 2018 that XNA’s finance committee recommended for approval. Under the proposed rates, the terminal rental rate would decline 20% to $55.71, and the landing fee would decrease 14% to $2.42. How the per-turn rate is calculated would change, pushing up a portion of the rate almost 20% to $52.48. The per-turn rate is based on landings and departures, and the proposed increase is based on a recommendation from the airport’s attorneys.

The airport has been in a mediation with its larger carriers regarding the per-turn charge and has offered to increase the rate for the B concourse. Low-cost carrier Allegiant operates from there, which is at the northwest section of the terminal, and the larger carriers operate from gates in the A concourse at the northeast section of the terminal.

While a portion of the per-turn rate will rise, another part will decline 20% to $21.98. Combined, the per-turn rates will increase 4% to $74.46.

2018 BUDGET
The 2018 budget includes total revenue of $28.651 million and total expenses of $29.188 million. Johnson explained that the difference between expenses and revenue can be covered by the airport’s $14 million development fund, which has been steadily rising. The fund, which is unrestricted cash, has been used to pay for capital projects.

Excluding capital projects, the budget shows an operating income of $6.177 million for 2018. The budget includes positions for a planning and construction director and chief operating officer, which have yet to be filled, and insurance expenses rising 20%.

Some of the capital projects set for 2018 include the terminal modification and rehabilitation of the taxiway. The cost of these projects will are expected to be reimbursed up to 90% with federal grant money. Other projects include designing the checkpoint expansion and expanding the economy parking lot.

Members of the board also discussed Van Laningham’s performance, and 11 of 14 of the board members provided him with performance evaluations. After an executive session, members of the personnel committee, which comprise of members of the board, recommended Van Laningham to receive a 7.5% pay increase. If approved, his salary would rise to $200,524 annually starting Jan. 1.